If you are in the market for a new home and are interested in an FHA Loan, then I suggest that you should be familiar with the FHA Guidelines On Collections. These guidelines are important because they will allow you to purchase a new home without the worry of having your existing collections affect your approval with Fairway Independent Mortgage Corporation NMLS# 2289. If you currently aren’t working with me I can assure you that a lot of lenders have their own guidelines which will prohibit them from approving loans to borrowers with poor credit history and bad credit. If you find a lender who doesn’t abide by the FHA Guidelines On Collections then you are encountering lender overlays. Lender overlays are additional guidelines lender make you satisfy in addition to the minimum loan program guidelines. Lenders are well within their rights to enforce these, but this doesn’t mean you have to use these lenders. When you work with a professional like myself you can be confident that I only use lenders who abide by the minimum guidelines for loan programs and this includes FHA Guidelines On Collections, and let me tell you, Fairway Independent Mortgage Corporation NMLS# 2289 fits that profile exactly.
There are 2 different categories for collection accounts which are used in the FHA Guidelines On Collections and they are Medical Collections and Non-Medical Collections. The type of debt which is in collections can determine how this debt is treated by FHA Guidelines when you are trying to obtain a mortgage. Per FHA Guidelines, there is not a requirement to pay-off existing collection accounts in order to get a loan approval, so if you currently have collection accounts, you do not want to do anything with them until you talk to myself, Nick Ferrante NMLS# 1110570 at 630-465-2656.
The first type of collection we will discuss is the Medical Collections and the easy thing about this is per FHA Guidelines On Collections, medical collections are not calculated into your debt to income ratio. If you have medical collection in your credit profile, then you definitely do not need to worry about them when trying to get approved for a loan. The issue with collections and how they can affect your approval comes from Non-Medical Collections. If your total non-medical collection accounts total to over $2,000 then these debts are going to be calculated into your debt to income ratio. The amount that is calculated into your monthly debt to income ratio is going to be 5% of the total amount of debt outstanding. For example, if you have $6,000 of non-medical collections, you will be forced to use $300 towards your debt to income ratio which is a significant hit to your purchasing power.
In order to avoid mistakes associated with FHA Guidelines On Collections you will need to work with an experienced loan officer like myself at Fairway Mortgage NMLS#2289. I have the experience and knowledge of the FHA Guidelines On Collections inside and out and will not guide in you in the wrong direction. I am available any time of the day for my borrowers so just reach out today!